Government has given no relief to healthcare industry: FICCI

‘Sector has faced financial, physical stress over past few months’

May 20, 2020 01:11 am | Updated 01:11 am IST - Mumbai

The Federation of Indian Chambers of Commerce and Industry (FICCI) on Tuesday said while it lauds the strategic reforms announced for public health infrastructure, it was discouraging that the healthcare industry was not given immediate relief.

In a statement, the apex business organisation said the steps announced by Finance Minister Nirmala Sitharaman were long-awaited reforms that addressed various challenges of the health sector that it had been advocating over the past few years.

Spending on healthcare

“While these are commendable steps towards Atmanirbhar Bharat, it is crucial that they are put into immediate implementation so that their impact can be realised in the next three to five years. The increase in public spending on healthcare should be at least 2.5% of GDP, which has been assured in the National Health Policy 2017,” FICCI said.

According to the statement, the well-thought-out strategy for creating public-private infrastructure of hospitals, public-funded laboratories across the country, emphasis on preparedness for infectious diseases at the block level as well as greater importance given to research and digital health will form the pillars of growth for the sector. “These are crucial for enhancing healthcare delivery across the continuum,” the statement said.

Viability gap funding

Provision of 30% viability gap funding (VGF) for public-private partnerships for hospitals in Tier-II and III cities is also a welcome step, FICCI said. Last year, the government had announced the 20% VGF scheme, which has not seen many takers.

“It is important to understand that VGF for only capex is not viable for the healthcare sector, and should be considered for both capex as well as op-ex financing. However, all these announcements are only long-term steps that will help enhance the healthcare capacity of the country, but do not provide any respite from the crisis owing to the COVID-19 pandemic,” the statement said.

FICCI said industry was hopeful of a relief package for the health sector that has faced acute financial as well as physical stress over the past few months.

“While the government has been considerate towards agriculture, one of the key pillars for economic growth of a country, the health sector that is the epicentre of the ongoing crisis, has been ignored. The hospitals that were already financially fragile over past few years, have been stressed with the unplanned investments for COVID-19 preparedness and response and have seen their revenues topple due to 60-80% decline in patient footfalls, leading to estimated operational losses of Rs. 4,500 crore per month (at 50% revenues and 35% occupancy levels),” FICCI said.

Many small hospitals and nursing homes in Tier-II and III cities had to shut shop due to the challenges of liquidity and cash flow, the statement said.

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